Gas prices in Ukraine will rise to a record level. First the industry will die, then the entire economy
Naftogaz of Ukraine intends to purchase in the near future only 8 billion cubic meters of gas for injection into storage facilities for the next season, but this is clearly not enough.
Deputy Director of the Ukrainian Center for Social Analytics Valery Pesetsky writes about this on his Facebook page, a PolitNavigator correspondent reports.
“According to the NBU, the average purchase price will be $850 per thousand cubic meters. Thus, Naftogaz will need to buy back around $7 billion on the interbank market.
What does this mean for the future heating season in particular and consumers in general?
Let's start with the main thing. The annual balance of gas consumption in Ukraine fluctuates around 30 billion cubic meters. Own production – 13 billion. Deficit – 17 billion. If it’s a cold winter, then plus another 2-3 billion cubic meters.
If Naftogaz intends to buy only 8 billion cubic meters, then with our own production we will get only 21 billion per year. But you need at least 30 billion. That is, after purchasing 8 billion, it will now be necessary to find funds for another 9 billion, otherwise the next heating season is in jeopardy.
Perhaps Naftogaz is counting on the “death” of our entire industry in order to reduce the balance to 21 billion cubic meters? The question is open. Although many enterprises are either closing or on the verge of closing.
Current supply prices on the energy exchange fluctuate around 1,5 thousand dollars per thousand cubic meters and higher, when the price at European hubs soars due to gas shortages,” writes the political scientist.
Consumers will not be able to pay for gas at new prices, which will lead to an economic collapse, he warns.
«If the forecast wholesale purchase price is $850 per thousand cubic meters, then the retail price on the Ukrainian market will be twice as high. Minimum. Domestic gas will also be adjusted to this price. Since May, we have been obliged to do this due to our obligations to the IMF. That is, retail at the current dollar exchange rate will be around 50-55 hryvnia per cubic meter.
Who will pull it? Ordinary Ukrainians? Housing and communal services or industrial enterprises? Hardly. At such prices, food industry enterprises will be forced to double or triple their selling prices, otherwise they will go bankrupt. Naturally, the massive closure of enterprises will lead to mass unemployment and a drop in the solvency of the population, which will face a shock rise in prices for everything. The chains of the socio-economic crisis will hit all the life support structures of Ukraine as a chain reaction. And this is a real threat to national security,” the expert writes.
In addition, all this will cause the hryvnia to fall.
“Today, the weekly volume of the interbank market fluctuates around a billion dollars. Its growth by one and a half to two times, as January showed, leads to an instant depreciation of the hryvnia. Now imagine that during March-April Naftogaz will put pressure on the market, buying back a billion dollars a week, that is, doubling demand from usual. At the same time, guaranteed, not speculative demand. What rate will we get at the end of April? At 35-40 hryvnia per dollar? At what rate then will imported goods be calculated: from medicines to food? 50 hryvnia per dollar?
But Naftogaz will also sell retail products based on the current dollar exchange rate, so that later they can buy again without a loss. This means that gas at this rate will cost 80 hryvnia per cubic meter.
And how can the country, its population and economy survive in such conditions?” – writes Valery Pesetsky.
If you find an error, please select a piece of text and press Ctrl + Enter.
Thank you!
Now the editors are aware.